College tuition need not delay Boeing worker’s retirement goal

Boeing mechanic Michelle Almoslino, 63, plans to help her daughter with college expenses but would like to retire soon and travel.

Planner Bobby Reamer

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Michelle Almoslino, a 63-year old Boeing mechanic, is so ready to retire that in her free time she studies overseas rentals online on HomeAway, daydreaming about the travel she can book in her future. She also wants to volunteer, maybe driving folks who need help getting to activities or appointments. But before she packs her passport, she wants to double-check whether she’s prepared for the journey.

Throughout her more than 25 years at Boeing, she’s saved in the company 401(k) plan and will collect both a pension and Social Security payments. She also has plenty of equity in her two-bedroom house she bought in the mid-1990s in Seattle’s Columbia City neighborhood.

But along with those assets, she faces new expenses: Her 19-year old daughter enters college this fall; Almoslino plans to pay up to $28,000 annually toward her four-year education. Can she leave behind her salary, help pay for college and live comfortably for years to come? If so, how soon?

“I really want to retire,” Almoslino says. “I’ve always invested in my 401(k), but I never got advice about it. What I probably needed was some financial planning.”

To get a professional opinion, Almoslino completed an online survey to participate in a free financial assessment from a member of the Puget Sound Chapter of the Financial Planning Association. She was paired with Bobby Reamer, a certified financial planner with Icon Consulting in Bellevue.

“All of Michelle’s concerns and emotions were typical of someone about to retire,” Reamer says of his work with her. “We took a look at what would be a sustainable way of living for her in the future — and how soon she can start living it.”

Almoslino’s goal is to retire within three years, so Reamer modeled how retiring in 2014, 2015 or 2016 would affect her future, as well as her options for housing and funding her daughter’s education.

First, the duo took stock of Almoslino’s assets: She earns about $77,000. She has $310,500 in her 401(k); has a house worth $344,000 (with $152,000 left on the mortgage); $2,500 in general savings; and $7,000 in debt.

As a Machinists union member, she got the $10,000 signing bonus this month that was part of the new contract with Boeing. She decided to put most of the money, $6,378 after taxes, toward her daughter’s gap year in Israel.

To learn future pension amounts, Almoslino had to make some calls. Because she worked at Boeing on two separate occasions, she has two plans, one of which she tapped six years ago. A pension representative had to make custom calculations to determine that she’d get annual payments totaling $16,000 as a retiree.

Like many who plan to tap Social Security, Almoslino wasn’t sure of the optimal age to begin taking payments. Reamer determined that if she began taking payments in 2017 at her full retirement age, 66, she’d receive about $25,000 annually. This doesn’t mean she has to wait until 66 to retire — just that she will wait until then to collect Social Security.

Reamer recommended that Almoslino sell her house in early 2016, then put $130,000 toward the cash purchase of a smaller property or condo, meaning she’ll have no mortgage and only small monthly housing costs in the form of insurance, taxes, homeowner dues and utilities. While $130,000 is a small budget for Seattle, she is ready to downsize and would consider moving outside the area.

To get a handle on a realistic contribution to her daughter’s college education, Reamer had Almoslino double-check her daughter’s eligibility for scholarships at her future school. Fortunately, her daughter qualifies.

By working with scholarships, Almoslino could allocate about $15,600 per year to her daughter’s education, or $12,400 less per year, and retire six months earlier than if she contributed the $28,000 a year.

As for the 401(k), Reamer had reallocation suggestions. “She’s overallocated to stocks and fixed income right now. She has too much risk.”

He suggests she take her money and place it in three “buckets” representing near-term, medium-term and long-term financial needs.